Calculating Tragedy: Assessing the Costs of Terrorism
36 Pages Posted: 13 Dec 2004
Date Written: November 2004
The trends and consequences of terrorist activities are often captured by counting the number of incidents and casualties. More recently, the effects of terrorist acts on various aspects of the economy have been analyzed. These costs are surveyed and put in perspective. As economic consequences are only a part of the overall costs of terrorism, possible approaches for estimating the utility losses of the people affected are discussed. Results using the life satisfaction approach, in which individual utility is approximated by self-reported subjective well-being, suggest that people's utility losses may far exceed the purely economic consequences.
Keywords: Terrorism, subjective well-being, life satisfaction, utility loss
JEL Classification: D74, H56, I31
Suggested Citation: Suggested Citation